Real Madrid 'to garner at least €1.1bn from Adidas renewal'

Soccer - 05 Nov 2018

Author: Simon Ward

Real Madrid are in line to rake in upwards of €1.1 billion ($1.25 billion) from a renewed kit supply deal with incumbent partner Adidas, it has been reported.

The record contract with the German sportswear powerhouse comes into effect in the 2020-21 season, and is worth a basic €110 million per annum over 10 years, according to Spanish sports newspaper Marca.

However, once a variable element of the agreement relating to merchandise sales is taken into account, Real are said to be set to earn €150 million per year from the tie-up.

Adidas have been the club’s kit supplier since 1998, and the present agreement, which expires at the end of next season, is understood to be worth a maximum of €52 million per year, including a fixed fee of €42 million and a variable of up to €10 million.

In May of last year, German magazine Der Spiegel cited documents obtained by the Football Leaks website in claiming that Real stood to earn €1 billion from their partnership with Adidas between 2015 and 2024.

This included a fixed annual fee of €70 million, plus 22.5 per cent of all sales of Real Madrid branded merchandise worth around €30 million per year.

The report added that the contract included incentives of €2.5 million if the club won Spain’s LaLiga, rising to €3.5 million after 2020, and €5 million for winning the Uefa Champions League, rising to €7 million after 2020.

Real’s arch-rivals Barcelona are in the first year of a renewed kit deal with Nike, which they claimed will be worth around €155 million per year although this figure included royalties from sales of merchandise, and bonuses for success on the field.

The five-year agreement runs until the end of the 2022-23
season when the members will have the opportunity to vote on a further
five-year extension.

However, Marca claims that Barcelona, which have regained control of their retailing, licensing and merchandising business from Nike, are only receiving €83 million per year from the US sportswear giant.

Last year, Real Madrid extended their shirt sponsorship contract with Emirates in a deal that came into effect this season and is reported to be worth €70 million per year through to 2021-22.

The previous agreement with the Dubai-based airline was worth about €30 million per annum.

Real’s on-field success has boosted the bottom line, as the club has won the Uefa Champions League in four of the last five seasons, but it has made a sluggish start to the current campaign, and last week parted company with coach Julen Lopetegui who had been in charge for less than five months.

The club’s general assembly approved a budget of €751 million for the 2017-18 season, an increase of 11 per cent on the previous year.

Commercial turnover increased by 16 per cent to €297 million, a figure that is expected to climb further, to €305.2 million, in 2018-19.

Last season, sponsorship and licensing alone amounted to €239.7 million, a rise of 18.2 per cent on
2016-17, while sales at stores managed by Adidas came to €26.5 million, up 5 per cent.